Bombardier, John Deere form strategic alliance

Bombardier and John Deere have created a strategic alliance to develop and market wheeled utility vehicles, the companies announced Jan. 23.
In interviews with Powersports Business magazine, representatives of the two companies said the venture would allow them to share technologies and build machines for each other that would carry the other company’s brand.
“By combining expertise and resources, we’re able to get to the market quicker with high quality products for each company,” said Marc Lacroix, a Bombardier spokesman.
Bombardier, for example, will build machines for John Deere based upon Bombardier’s ATV platform in the first phase of the partnership. The machines will feature the Deere colors and logo but will have the Bombardier DNA.
“The machines will have the design and look and feel of Bombardier,” said Lacroix.
However, Lacroix said that machines made by Bombardier for Deere won’t be available to Bombardier dealers.
These machines will be built at the Bombardier plant in Valcourt, Quebec, and will begin shipping by the end of 2003, said Lacroix.
Bombardier plans to spend $6 million to expand its production capacity at the plant. It will have to add a second ATV production shift at the plant, he said, approximately 150 persons.
The move could be a huge boost for Bombardier dealers who are looking for additional machines to sell, especially larger six-wheeled machines like Deere’s popular Gator model. Deere is the leader in the utility market, holding approximately 30% market share.
Another key powersports competitor is Kawasaki, which manufactures the popular Mule series. Kawasaki trails Deere in market share, but has about 20% of the market.
Polaris has been making a move into this area with its Ranger II series and has been successful in penetrating consumer markets. Polaris has an estimated 5% market share.
It could also be a great new revenue stream for Bombardier’s recreational products group. John Deere has close to 3,000 dealers in North America who could take on the Deere branded products built by Bombardier. A spokesman for Deere said it’s too early to tell how many Deere dealers might participate. “Give us about 60 days to figure that out,” he said.
The alliance will combine the efforts of Deere’s Worldwide Commercial and Consumer Equipment Division and the Bombardier Recreational Products unit “to produce creative new concepts aimed at expanding the business opportunities for both companies,” said the companies in a joint statement announcing the venture.
The alliance is not the same as the working relationship between Suzuki and Kawasaki where the two companies share products with different brand badges.
“It’s not the same extent,” said Lacroix. “Ours is more strategic, to share resources and technologies. It’s more like GM and Toyota working together.” GM builds the Pontiac Vibe and Toyota has its Matrix. “They use the same basic technology but the cars are different,” said Lacroix.
No money has changed hands up front between Deere and Bombardier, according to Lacroix. “We’ve become each other’s customer and supplier,” he said.
John Deere, which produced snowmobiles in the 1970s, doesn’t intend to get back into the production of recreational products.
“We’ve found a market for the Gator,” said Ken Golden of John Deere, “and the market can be bigger with different (machines).
“Plenty of our customers use ATVs, and it just makes sense to be in this with them.